Australian Research Manager & Political Scientist

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Category Archives: Research

1. Loretta Napoleoni. 2015. The Islamist Phoenix: The Islamic State and the Redrawing of the Middle East. New York: Seven Stories Press. PhD supervisor Luke Howie and I have discussed me including a section on ISIS in my study of terrorist organisations as strategic subcultures. Napoleoni contends that ISIS engages in a new form of nation-building in order to re-establish the Caliphate. One of several quickly written books to emerge as ISIS has gained military power projection in Iraq.

2. Richard Seymour. 2014. Against Austerity: How We Can Fix The Crisis They Made. New York: Pluto Press. A left-wing polemic that anticipated current political events in Greece, the Queensland state election, and in Australian federal politics. Seymour describes austerity as neoliberal crisis management, and as an elite strategy to change socio-economic foundations. An angry and insightful analysis of the conditions that might lead to oligarchical collectivism (George Orwell, Nineteen Eighty-Four).

1. Immerse yourself in the research literature of your discipline. Zhang spent years reading mathematics journals about alegebraic geometry number theory at the University of Kentucky, and keeping a low profile: he had published only one paper, in 2001.

2. Choose a focal point or meta-question for your research program that will have a significant impact. Zhang focused on ‘bound gaps’ about prime numbers.

3. Organise your life’s tasks in order to pursue your individual research program. Zhang worked at a Subway and in New Hampshire in order to have more time to write and pursue his research program on his own terms.

4. Streamline your publication track record to focus on publications in high-ranked journals. Zhang submitted “Bounded Gaps Between Primes” in late 2012 to Annals of Mathematics after years of work.

5. Understand how the referee process works for journal articles. Zhang benefited from reviewers Henryk Iwaniec (Rutgers) and John Friedlander (University of Toronto) who were critical yet sympathetic to Zhang’s study, and Annals of Mathematics editor Nicholas Katz.

I spent today analysing the Haruki Murakami Underground interview with former Aum Shinrikyo member Hajume Masutani. Some insights:

1. Masutani experienced early alienation from his family, initial career aspirations, and university studies.

2. Masutani encountered and joined Aum after seeing an Aum book and visiting a dojo. He spent seven years in Aum including working on animation about Aum’s leader Shoko Asahara which now enjoys an afterlife on YouTube.

3. Masutani engaged in cycles of work and meditation but did not really progress in Aum. He became suspicious of Asahara after meeting him. His experiences reflected parallel research that psychiatrist Robert Jay Lifton did on Aum.

4. In 1993, Masutani noted that Aum adopted a more proto-militant outlook and a greater emphasis on Tibetan Vajrayana teachings.

5. Masutani grew more alienated from Aum after leaving and learning of the 20th March 1995 sarin gas attack on the Tokyo subway system. His views to Murakami were similar to United States cultic scholars like Margaret Thaler Singer.

World Event Trading: How to Analyze and Profit from Today’s Headlines by Andy Busch (Hoboken, NJ: John Wiley & Sons, 2007). Presents a series of frameworks that Busch uses for event arbitrage in currencies and equities markets.

Momentum

Asset Rotation: The Demise of Modern Portfolio Management and the Birth of an Investment Renaissance by Matthew P. Erickson (Hoboken, NJ: John Wiley & Sons, 2014). How exchange traded funds can be used for a momentum strategy that uses a two-asset portfolio.

The Art of Value Investing: How the World’s Best Investors Beat the Market by John Heins and Whitney Tilson (Hoboken, NJ: John Wiley & Sons, 2013). A collection of interviews with successful fund managers who are value investors.

Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations by Tobias E. Carlisle (Hoboken, NJ: John Wiley & Sons, 2014). A quantitative analysis of how activist investors use value investment strategies in the market for corporate control.

The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment (New York: Palgrave Macmillan, 2014). Value investment as a framework for cultivating character and personal growth.

Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World by Ronald D. Orol (Hoboken, NJ: John Wiley & Sons, 2008). The experiences of value-oriented hedge fund managers during the 2003-08 speculative bubble.

Global Value: How to Spot Bubbles, Avoid Market Crashes, and Earn Big Returns in the Stock Market by Meb Faber (The Idea Farm, 2014). A synthesis of value investing and global macro approaches.

The Manual of Ideas: The Proven Framework for Finding the Best Value Investments by John Mihaljevic (Hoboken, NJ: John Wiley & Sons, 2013). Presents the value investing framework of the Value Investors Club.

The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor by Howard Marks (New York: Columbia University Press, 2013). The value investment philosophy that Marks implements at Oaktree Capital Management.

The Nature of Value: How to Invest in an Adaptive Economy by Nick Gogerty (New York: Columbia University Press, 2014). Presents a value creation model used by the hedge fund Bridgewater.

The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William N. Thorndike (Boston, MA: Harvard Business School Press, 2012). Effective capital allocation as a key value investment strategy.

The Snowball: Warren Buffet and the Business of Life by Alice Schroeder (New York: Bantam Books, 2008). The authorised biography of value investor Warren Buffett.

Sources of Value: A Practical Guide to the Art and Science of Valuation by Simon Woolley (Cambridge: Cambridge University Press, 2009). BP’s valuation framework for analysing the economic value of companies.

Value: The Four Cornerstones of Corporate Finance by Tim Koller, Richard Dobbs, and Bill Huyett (Hoboken, NJ: John Wiley & Sons, 2011). Growth, return on invested capital, and cashflow analysis in corporate finance as the foundations for valuation of companies.

Valueable: How To Value The Best Stocks and Buy Them for Less Than They’re Worth (2nd edition) by Roger Montgomery (My 2 Cents Worth Publishing, 2010). The investment framework and experiences of Australian value investor Roger Montgomery.

The Billionaire’s Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund by Anita Raghavan (New York: Business Plus, 2013). Hedge fund manager Raj Rajaratnam and the demise of the Galleon hedge fund.

Inside The House of Money: Top Hedge Fund Traders on Profiting in the Global Markets (rev. edition) by Steven Drobny (Hoboken, NJ: John Wiley & Sons, 2009). How hedge fund traders profited during the 2003-08 speculative bubble.

The Little Book of Hedge Funds: What You Need to Know About Hedge Funds but the Managers Won’t Tell You by Anthony Scaramucci (Hoboken, NJ: John Wiley & Sons, 2012). An introduction by a hedge fund manager to hedge funds as an active management vehicle to extract alpha from financial markets.

More Money Than God: Hedge Funds and the Making of a New Elite by Sebastian Mallaby (New York: The Penguin Press, 2010). The history of hedge funds as an active management structure and biographies of hedge fund managers.

Barbarians At The Gate: The Fall of RJR Nabisco by Bryan Burrough and John Helyar (New York: HarperBusiness, 2008). The market for corporate control of RJR Nabisco and the takeover’s ‘winners curse’.

The Fissured Workplace: Why Work Became So Bad For So Many and What Can Be Done to Improve It (Boston, MA: Harvard University Press, 2014). A labour / union critique of the asset management / private equity model and its impact on workers.

The Masters of Private Equity and Venture Capital: Management Lessons from the Pioneers of Private Investing by Robert A. Finkel with David Greising (New York: McGraw-Hill, 2010). Anecdotes about private equity and venture capital deals.

Private Equity At Work: When Wall Street Manages Main Street by Eileen Appellbaum and Rosemary Batt (New York: Russell Sage Foundation, 2014). Presents a justification for and evaluation of private equity as a form of active management.

The Private Equity Edge by Arthur B. Laffer, William J. Hass and Shepherd G. Pryor IV (New York: McGraw-Hill, 2009). A justification for private equity as a form of experimental innovation.

More Than You Know: Finding Financial Wisdom In Unconventional Places (rev. edition) by Michael J. Mauboussin (New York: Columbia University Press, 2008). How to find and extract alpha from financial markets using lessons from psychology and science.

The Nature of Value: How to Invest in an Adaptive Economy by Nick Gogerty (New York: Columbia University Press, 2014). Presents a value creation model used by the hedge fund Bridgewater.

Plutocrats: The Rise of the Global Rich and the Fall of Everyone Else by Chrystia Freeland (New York: The Free Press, 2012). The geopolitical worldview of contemporary business and financial elites.

The Predators’ Ball: The Inside Story of Drexel Burnham and the Rise of the Junk Bond Traders by Connie Bruck (New York: Penguin Books, 1989). How financier Michael Milken’s deal flow enabled him to take control of Drexel Burnham Lambert.

Putin’s Kleptocracy: Who Owns Russia? by Karen Dawisha (New York: Simon & Schuster, 2014). How Putin’s regime in Russia dealt with the oligarchs, and engaged in institutional capture and value appropriation of Russian state assets for private gain.

The Snowball: Warren Buffet and the Business of Life by Alice Schroeder (New York: Bantam Books, 2008). The authorised biography of value investor Warren Buffett.

The Business of Venture Capital: Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies (2nd edition) by Mahendra Ramsinghani (Hoboken, NJ: John Wiley & Sons, 2014). Interviews with venture capital practitioners on deals and term sheets.

Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel with Blake Masters(London: Virgin Books, 2014). The PayPal co-founder and Facebook / SpaceX investor presents a venture capital model of value creation.

1. Complete a full PhD draft (two chapters plus rewrites). Model the rewrites on the chapter / structure / paragraph format used for the Princeton Studies in International History and Politics and using the methodology insights of the Cambridge Series in Political Science Research Methods. Submit PhD-related presentation proposals to International Studies Association for possible inclusion in the 2016 annual convention.

2. Develop an Academic Moneyball framework (one page) for business development / contract management / research management activities. Draw on asset management, hedge fund, private equity, and value creation domains – for active management – in order to develop the Academic Moneyball framework. Note relevant insights in one paragraph (the Aramchek model) from Russia’s Putin regime on leadership and value appropriation in bureaucracies that also face volatility from international capital markets (some potential background reading: Putin vs. Putin; Putin’s Kleptocracy; How Russia Really Works; The Social Construction of Russia’s Resurgence; The Man Without A Face, and Nothing Is True and Everything Is Possible). Distill into a rolling 100-day action plan (one page) and work breakdown structure (Work Breakdown Structures: The Foundation for Project Management Excellence).

The sections ‘Defining Business Intelligence’ (pp. 8196-8197) and ‘The Intelligence Cycle’ (p. 8197) are plagiarised without attribution from a 2003 Masters essay I wrote for Swinburne University’s Strategic Foresight program on business intelligence (PDF).

I have informed the publisher and Dr Yaghob Fatollahi, Vice-Chancellor for Research Affairs at Tarbiat Modares University.

Simons rarely gives interviews. One of the best is an Institutional Investor interview he gave in 2000 (PDF). One insight is that Renaissance makes trades in specific time periods using pattern recognition to model volatility.

Simons has done important work in differential geometry and the theoretical physics subdiscipline of string theory. I recently looked at some academic journal articles by Lars Brink (Sweden’s Chalmers University of Technology) and Leonard Susskind (Stanford University) to try and understand how Simons views financial markets.

String theory proposes one-dimensional objects called strings as particle-like objects that have quantum states. String theory and cosmology has progressed over the past 35 years to describe this phenomena but still lacks some key insights.

How might Simons use string theory to understand financial markets? Two possibilities:

(1) The mathematical language of couplings, phase transitions, perturbations, rotational states, and supersymmetries provides a scientific way to describe financial market data and price time-series. It does so in a different way to fundamental analysis, technical analysis, and behavioural finance: Simons uses string theory to understand the structure of information in financial markets. (Ed Thorp pursued a similar insight with Claude Shannon using probability theory.) String theory-oriented trading may be falsifiable in Karl Popper’s philosophy of science.

(2) String theory provides a topological model that can be applied to money flows between mutual funds, hedge funds, and bank trading desks over short periods of time. This might enable Simons’ traders to forecast the likely catalysts for changes in stock prices in the short-term and to trade accordingly. This might involve using string theory to forecast how price trajectories might change if portfolio managers at other funds alter their portfolio weights for a stock. In doing so, Simons is trading in a similar way to SAC’s Steve Cohen (who uses game theory) and D.E. Shaw’s David Shaw but uses different methods of pattern recognition to do so.

I have made a list of popular science books and Springer academic monographs to keep an eye on string theory. Simons’ success also illustrates how insights from one knowledge domain (string theory, astrophysics, computational linguistics, and voice recognition) can be transferred to another domain (financial markets trading).